Did you know, approximately 60 percent of people break their mortgage before their mortgage term matures? While this is not necessarily avoidable, most homeowners are blissfully unaware of the penalties that can be incurred when you break your mortgage contract – and sometimes, these penalties can be painfully expensive.

Below are some of the most common reasons that individuals break their mortgage. Being aware of these might help you avoid them (and those troublesome penalties), or at least help you plan ahead!

Sale and purchase of a new home

If you already know that you will be looking at moving within the next 5 years, it is important to consider a portable mortgage. Not all mortgages are portable, so if this is a possibility in your near future, it is best to seek out a mortgage product that allows this. However, be aware that some lenders may purposefully provide lower interest rates on non-portable mortgages but don’t be fooled. Knowing your future plans will help you avoid expensive penalties from having to move your mortgage.

Important Note: Whenever a mortgage is ported, the borrower will need to re-qualify under current rules to ensure you can afford the “ported” mortgage based on your income and the necessary qualifications.

Utilize equity

Another reason to break your mortgage is to obtain the valuable equity you have built up over the years. In some areas, homeowners have seen a huge increase in their home values. Taking out equity can help individuals with paying off debt, expand their investment portfolio, buy a second home, help out elderly parents or send their kids to college.

This is best done when your mortgage is at the end of its term, but if you cannot wait, be sure you are aware if there are penalties associated with your mortgage contract.

Pay off debt

Life happens and so can debt. If you have accumulated multiple credit cards and other debt (car loan, personal loan, etc.), rolling these into your mortgage can help you pay them off over a longer period of time at a much lower interest rate than credit cards. In addition, it is much easier to manage a single monthly payment than half a dozen! When you are no longer paying the high interest rates on credit cards, it can provide the opportunity to get your finances in order.

Again, be aware that if you do this during your mortgage term, the penalties could be steep and you won’t end up further ahead. It is best to plan to consolidate debt and organize your finances when your mortgage term is up and you are able to renew and renegotiate.

Cohabitation, marriage and/or children

As we grow up, our life changes. Perhaps you have a partner you have been with a long time, and now you’ve decided to move in together. If you both own a home and cannot afford to keep two, then you may need to sell one of the homes which could break the mortgage.

Divorce or separation

A large number of Canadian marriages are expected to end in divorce. Unfortunately, when couples separate it can mean breaking the mortgage to divide the equity in the home. In cases where one partner wants to buy the other out, they will need to refinance the home. Both of these break the mortgage, so be aware of the penalties which should be paid out of any sale profit before the funds are split.

Major life events

There are some cases where things happen unexpectedly and out of our control, including: illness, unemployment, death of a partner or someone on the title. These circumstances may result in the home having to be refinanced, or even sold, which could come with penalties for breaking the mortgage.

Removing someone from title

Did you know that roughly 20% of parents help their children purchase a home? Often in these situations, the parents remain on the title. Once their son or daughter is financially stable, secure and can qualify on their own, then it is time to remove the parents from the title.

Some lenders will allow parents to be removed from title with an administration and legal fees. However, other lenders may say that changing the people on Title equates to breaking your mortgage resulting in penalties. If you are buying a home for your child and will be on the deed, it is a good idea to see what the mortgage terms state about removing someone from title to help avoid future costs.

Get a lower interest rate

Another reason for breaking your mortgage could be to obtain a lower interest rate. Perhaps interest rates have plummeted since you bought your home and you want to be able to put more down on the principle, versus paying high interest rates. The first step before proceeding in this case is to work with your mortgage broker to crunch the numbers to see if it’s worthwhile to break your mortgage for the lower interest rate – especially if you might incur penalties along the way.

Pay off the mortgage

Wahoo!!! You’ve won the lottery, got an inheritance, scored the world’s best job or had some other windfall of cash leaving you with the ability to pay off your mortgage early. While it may be tempting to use a windfall for an expensive trip, paying off your mortgage today will save you THOUSANDS in the long run – enough for 10 vacations! With a good mortgage, you should be able to pay it off in 5 years, thereby avoiding penalties but it is always good to confirm.

Some of these reasons are avoidable, others are not. Unfortunately, life happens. That’s why it is best to seek the advice of an expert.

In life, things rarely go as planned. This is especially true when it comes to real estate! When it comes to buying a new home, in a perfect world, most of us would like to take possession of their new residence before having to move out of the old one. This makes moving a lot easier and allows you time for painting or renovations prior to moving into your new digs. Unfortunately, this is where things get complicated.

Most people need the money from the sale of their existing property to come up with the down payment for the new house. This is where bridge financing comes in. Essentially, bridge financing allows you to ‘bridge’ the financial gap between the firm sale of your current home and the firm commitment to purchasing your new home.

WHAT ARE BRIDGE LOANS?

Bridge loans are short-term solutions that range from a few days to 3-4 months. This type of financing allows you to access some of the equity in your existing property, to put towards the down payment of your new home. However, to be eligible for a bridge loan, a firm sale agreement MUST be in place on your existing home, meaning all subjects have been removed. You will also require a purchase agreement for the new home to verify the amount required.

If you have not yet sold your home, you will not be eligible for bridge financing as the lender needs that to accurately calculate how much equity you have available and if you can afford your new home.

If you are currently looking to sell, or are in the midst of selling your home and considering bridge financing, it is important to understand that unless you can qualify and pay for two mortgages, you should always sell your existing home before purchasing a new one. There are a couple reasons for this:

• Property values are constantly changing. You won’t know how much money you have until you sell your home as a home is only worth what someone is willing to pay for it NOW. Past sales and future guesses don’t count!
• You need the proceeds from your existing home to help pay for the down payment on your new home, as well as renovations, moving costs and (if required) the size of mortgage you qualify for.

However, if you have firm sale and purchase agreements in place and are adamant about bridge financing, there are some things you should know.

Getting Fridge Financing

If you have sold your existing home but the closing date comes after the closing date of the new property you just purchased, then bridge financing will likely be your best option.

Remember – in order to qualify you must have a firm sale agreement for your current home and a purchase agreement for the new home. If you don’t have a firm selling date you may need to consider a private lender for the bridge loan.

If you do have firm sale and purchase agreements and want to move forward with bridge financing, you also need to consider the lender. Your new lender may not allow for bridge financing as not all lenders do. It is important to consider whether or not you think you need bridge financing so you can ensure you sign with the appropriate lender. Utilizing a Dominion Lending Centres mortgage broker can help you find a lender that provides the options you need.

COSTS OF BRIDGE FINANCING

It is important to mention that bridge financing typically costs MORE than your traditional mortgage. It is best to expect the Prime Rate plus 2, 3 or 4 percent, as well as an administration fee.

Also, in some cases, if you require a loan over $200,000 or a loan for more than 120 days, your lender may register a lien on the property until the loan is repaid. In order to remove this lien, you will need to consider the added costs of paying for a real estate lawyer.

PRIVATE FINANCING

If you have purchased your new home and are closing the deal, but your existing home has not yet sold, you would not qualify for bridge financing and would therefore need to consider a private loan.

Private financing is expensive, but it is generally a more affordable option versus lowering the asking price of your existing home and losing out on tens of thousands just to sell quickly. Seeking out a specialized mortgage broker who has access to individuals that lend money out privately to get the best rate and terms available to you.

COSTS OF PRIVATE FINANCING

Private loans are dependent on having enough equity in your current property to qualify and are more expensive than traditional mortgages. Private loans have a higher interest rate than traditional mortgages. The costs associated with a higher interest rate is in addition to an up-front lender fee. These amounts will vary based on your specific situation with consideration to: time required for the loan, the loan amount, loan-to-value ratio, credit, property location, etc.

When it comes to bridge financing and selling and buying of your home, don’t waste your time trying to figure it out on your own. Give a me a call and we can help you determine your best option!

In the mortgage world, a “guarantor” is someone who guarantees the mortgage on behalf of the mortgage holder in the case that the mortgage holder cannot pay back the loan.

Typically, a guarantor is used in a situation where the buyer has damaged or poor credit history or they lack sufficient income to qualify for the value of the loan. Adding a guarantor can help get these types of applications approved as this allows the lender to know they will be paid back should the mortgage holder default.

*It is important to  note that a guarantor is not the same as a co-signer.

Below are some key facts about guarantors and what makes them different from a co-signer:

1. The guarantor typically must be a spouse or immediate family member. This is not necessary for a co-signer who could be a friend or distant family member.
2. A guarantor does not have their name on the title of the property but it will be on a mortgage. In the case of a co-signer, the name is on both the title of the property AND the loan.
3. Guarantors may be impacted when qualifying for their own mortgage or other loans if they are responsible for guaranteeing a different loan.
4. They are responsible for the entire amount of the loan should the borrower default. In order to qualify, they must meet the requirements for credit check, income, liabilities and assets. Any potential guarantor should seek legal advice before signing for the loan to ensure they understand the contract.

Whether you want to be a guarantor for someone else’s mortgage, or you need one for your own, be sure to speak with me before making any decisions. I can help you review your options and explain the terms of the agreement or simply answer any questions you may have.

The housing supply shortage is one of the top issues in Canada’s real estate market. To address it, cities like Calgary are seeing a massive boom in new-build housing.

New construction offers many advantages, like more energy-efficient heating and cooling systems. Their titles can also feel less risky to transfer. After all, if the land was previously vacant, there’s no chance of unpermitted work from a previous owner causing losses for new buyers.

But did you know that new builds carry most of the same title and off-title risks as existing homes? Here’s why.

The home may be new, but the land isn’t

Even unimproved land belongs to someone. The land for the new construction may have changed hands several times before the developer bought it. Every transfer of the land can add defects to the title. Those defects can cause losses for the people who buy homes built on that land. On top of that, both the municipality and the developer might make a mistake or miscommunicate, which can end up causing a problem with the property.

Here are just some of the issues that can cause losses for owners, even on new constructions:

• Zoning mistakes, which can happen on either the municipality or the developer side.
• Setback agreements the developer didn’t know about, which results in homes built too close to the road.
• Pre-existing liens, for example from property tax still owed by the previous owner.
• Errors in the registration of the title.
• Pending legal action against the property that the developer didn’t know about.
• Builders’ liens, if the developer wasn’t able to fully pay a supplier or contractor.

Subdivisions can add extra complications

When an owner buys a property in a subdivision, they’re getting the title to that specific property. But all the land in that subdivision would have been under one original title before it was parceled out. The problem is, if someone has a claim against that original title, every property in the subdivision could be subject to it.

If the land for the subdivision was assembled from existing properties, that can add complications to the title of the assembled land. Those issues can then impact the new properties parceled out of that assembled land.

The developer could also make mistakes setting the property lines in a subdivision. If that happens, or if there are issues with the Real Property Reports/surveys conducted for any of the properties, the owners of those properties could have to deal with the consequences down the road.

Post construction endorsement

Some insurance providers offer more protection on new construction with a Post Construction Endorsement. It advances the policy date by one year for 14 covered risks, including encroachments, work orders and zoning bylaw violations.

That means the policy covers any later improvements to the property the developer had contracted for before the closing date. Owners can take possession of their new-build home knowing that this specific product is there to help handle surprises down the road.

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know! Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

• Who the agreement is between
• The length of the tenancy
• Rent amount and due date
• Required deposits (if any)
• Pet restrictions (if any)
• Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, internet, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

• Ask for proof of identity
• Thoroughly check all references
• Contact previous landlords to ask about rental and payment history
• Conduct a credit check to confirm income and financial suitability
• Get the names of all persons to be living in the rental unit
• If possible, doing some level of income verification is also prudent to determine affordability

Once you have reviewed the above, you will be in a good position to determine if the potential tenant is a good fit for the rental space.

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process!

With the continued rise of inflation, interest rates and the overall cost of living, the uncertainty can be unnerving for many individuals. But don’t fret! We have some tips and suggestions to help you manage your financial stress and help you to power through these latest economic changes:

1. Prioritize What You Can Control: It can be easy to feel like you have no control over your financial situation, especially with the economy in flux. However, dwelling on things you cannot fix will only cause more stress. Instead, we recommend focusing on what you CAN control within your situation. For instance, take a looking at your phone bill and services to see if you can reduce the cost (even temporarily), reviewing your grocery bill and looking for places to switch to cheaper brands or alternatives, perhaps buying in bulk. You’ll not only save money, but you will feel like you have more control and help reduce stress.
2. Pay Essential Bills: If you are struggling to pay your monthly bills, prioritizing them can help you gain some control. Knowing which bills are most important to pay first can help reduce anxiety as you’re not scrambling to decide what to do. In some cases, prioritizing your bills can also help you uncover unnecessary spending and you may find something that can be eliminated entirely (even temporarily).
   
3. Automate Payments and Savings: If you’re struggling to keep up with your bills and payments, or are finding that you keep saying you’ll save money, but aren’t, considering automation for your finances can be a step in the right direction. Ensuring that your bills are paid on time will help reduce stress and protect you from wasting money on penalties for missed payments. Alternatively, you can also set up automatic money transfers on the days you are paid to move funds into a separate, savings account before you even see it. Thereby, reducing the likelihood that you’ll skip on adding to your savings that month or use that money elsewhere.
   
4. Find Ways to Earn More Money: When cashflow is a problem and you are feeling the strain of trying to afford your current lifestyle, looking for ways to earn additional money can be a lifesaver! Consider part-time work for the weekends, consulting in your area of expertise or picking up extra hours at your current place of work. Now is also a great time to discuss with your manager if you are due for a raise.
   
5. Talk to Your Mortgage Professional: For most people, their mortgage is their largest monthly bill. If you are feeling the financial crunch, now is a great time to talk to your mortgage broker about potentially changing your payment schedule or even looking for a different mortgage product with better rates (ideally if you are at the end of your term). Do not hesitate to be honest about your situation and ask what your options are.

Regardless of where you find yourself financially, there are often many solutions to help reduce and resolve your stress and ensure that you have healthy monthly cashflow.

Most people who are thinking about a transfer or switch want to take advantage of a lower interest rate or to get a new mortgage product with terms that better suits their needs.

Up for Renewal?

If your mortgage is approaching renewal and you are considering a transfer or switch – great news! You won’t be charged a penalty. BUT you are still required to qualify at the current qualifying rate (unless you have an existing insured mortgage) and need to consider potential costs around legal charges, appraisal fees and penalty fees (if applicable). In some cases, the lender will offer you the option to include these fees in your mortgage or even cover the costs for you.

Currently have a Collateral Charge Mortgage?

If you have a collateral charge mortgage, these loans cannot be switched; they can only be registered or discharged. This means you would need to discharge the mortgage from your current lender (and pay any fees associated) before registering it with a new lender. The good news is that many lenders have programs specifically for this with no fees involved.

Still locked into your Mortgage?

If you’re considering a transfer or switch in the middle of your mortgage term, you will likely incur a penalty for breaking that mortgage. Typically, transfers and switches are done to take advantage of a lower interest rate (and lower monthly payments), but you want to be confident that the penalty doesn’t outweigh the potential savings before moving ahead.

Things to consider for a transfer or switch:

1. You may be required to pay fees associated with the transfer or switch, including possible admin and legal fees.
2. You will need to requalify under the qualifying rate to show that you can carry the mortgage with the new lender.
3. You will be required to submit documents that may include, but are not limited to, the following (depending on the lender):

• Verification of income and employment
• Renewal or annual mortgage statement
• VOID cheque
• Signed commitment
• Confirmation of fire insurance is required
• If LTV is above 80%, confirmation of valid CMHC, Sagen or Canada Guaranty insurance is required
• Payout authorization form
• Property tax bill

If your mortgage is currently up for renewal, consider reaching out. Not only can I advise you of any penalties or fees that may be associated with your desired transfer or switch, I also have the knowledge and ability to shop the market for you to find the best options to meet your needs. This extensive network of lender options allows me to ensure that you are not only getting the sharpest rate, but that the mortgage product and terms are suitable for you now – and in the future.

One of the important factors in home ownership is understanding things like your credit score.  Some people don’t pay much attention to this metric until they begin the mortgage discussion! However, you will find that your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power.

Credit scores range from 300 to 900, the higher your credit score the better. Ideally, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.

This score is based on spending habits and behaviours including:

• Previous payment history and track record of paying your credit accounts on time is the number one thing that your credit score considers.
• Your current level of debt and whether you’re maxed or not is the second most important factor.
• How long you have had your credit in good standing is the third most important factor.
• Attaining new credits is the fourth factor and can be a red flag if you’re opening several credit cards, accounts, or loans in a short period.
• Your credit mix is the final aspect of your credit score to determine whether you have a healthy mix of credit cards, loans, lines of credit, etc.

If you want to improve your credit score, you can! It is a gradual process, but it is well worth it. Here are some tips to help you get started!

1. Pay Your Bills: This seems pretty straightforward, but it is not that simple. You not only have to pay the bills, but you have to do so in full AND on time whenever possible.  Paying bills on time is one of the key behaviors lenders and creditors look for when deciding to grant you a loan or mortgage. If you are unable to afford the full amount, a good tip is to at least pay the minimum required as shown on your monthly statement to prevent any flags on your account.
2. Pay Your Debts: Whether you have credit card debt, a car loan, a line of credit, or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the most impact, start by paying the lowest debt items first and then work towards the larger amounts. By removing the low-debt items, you also remove the interest payments on those loans which frees up money that can be put towards paying off larger items.
3. Stay Within Your Limit: This is key when it comes to managing debt and maintaining a good credit score. Using all or most of your available credit is not advised. Your goal should be to use 30% or less of your available credit. For instance, if you have a limit of $1000 on your credit card, you should never go over $700. NOTE: If you find you need more credit, it is better to increase the limit versus utilizing more than 70% of what is available each month.

4. Credit and Loan Application Management: Reduce the number of credit card or loan applications you submit. When you submit too many credit card applications, your credit score will go down, and multiple applications in a short period can do more damage. Your best to apply for one or two cards and wait to see if you are accepted before attempting further applications.

If you have questions about your credit score, don’t hesitate to reach out to me. Whether you simply want to check your score or find out how you can improve it, my door is always open

So, you’re moving! Before you hunker down in your new home, there are a few things you will want to take care of regarding your new address.

Personal Contacts

First and foremost, if you haven’t yet, make sure to tell all your personal contacts about your address change, including:

• Relatives
• Friends
• Employer
• Schools, colleges, universities, daycares
• Landlord (if necessary)
• Clubs, associations and charities

Healthcare Professionals

For the purposes of keeping your health care records up to date, make sure to update your professional contacts:

• Doctor(s)
• Dentist
• Veterinarian
• Other healthcare specialist(s)

Creditors and Services

If you haven’t yet reached out to your services, you will want to do so as soon as possible for a smooth change of service from your existing address to your new address. These services include:

• Phone, cable, internet, mobility company
• Electricity / hydro
• Natural gas
• Heating fuel company (ask if you receive a deposit refund)
• Financial institution
• Credit card companies
• Insurance companies / broker(s)
• Lawyer / notary
• Subscriptions (e.g., newspapers, books, music, loyalty programs)

Government Services

Lastly, it is vital to inform the federal and your provincial/territorial government if your address changes to ensure all your data and ID cards are updated:

• Driver’s license
• Health Card
• Vehicle registration
• Canada Post / epost
• Canada Revenue Agency
• Canada Pension Plan / Quebec Pension Plan
• Old Age Security
• Employment Insurance

Need assistance in your search for a new home? Contact me today!

Technology is constantly evolving and adapting to our needs as a society and individuals. One of these exciting developments has been the creation and evolution of smart homes.

WHAT IS A SMART HOME?

A smart home is any home where the homeowners are able to control thermostats, lighting, appliances and other devices remotely over the internet through a smartphone or tablet. These can be set up through wired or wireless systems, allowing you full control wherever you are.

BENEFITS OF SMART HOMES

• Easy Home Management: One of the biggest and most appealing aspects of a smart home is the easy home management it provides. The integrated systems not only give you full control over every smart aspect of your home, but also allows you to view insights and data, which can help you analyze daily habits and energy use.

• Energy Savings: Smart homes provide opportunity for extensive energy efficiency and cost savings, depending on how you use the technology. Precise control over heating and cooling systems allows the system to learn your schedule and set preferences for the highest energy efficiency outcome. In addition, you can manage lighting to turn on and off at specified times to prevent energy waste. In addition, these homes are often stocked with top of the line appliances and electronics, with improved energy efficiency leading to further cost savings.

• Increase Appliance Functionality: Using smart appliances and electronics allows you to get even more out of these household tools. For instance, a smart oven can help you cook your chicken to perfection and a built-in audio system can provide the perfect atmosphere to any party. Plus, connecting your appliances and other systems will improve automation and give you even more to love about your home.

• Flexibility: With the ever-changing smart home technology, this affords you greater flexibility when it comes to your home and your changing needs.Smart homes are typically highly flexible, allowing you to easily swap out old models for updated versions, or to install new technology seamlessly.

• Improved Home Security: Incorporating security and surveilliance features, such as cameras, into your smart home network will help you maximize your home security. There are various options for home automation systems containing motion detectors, automated locks and surveillance cameras so that you always know what is going on. You can even set it to receive security alerts in real time!

• Growing Industry: Another advantage to smart homes is that this is a growing industry with technology that is constantly being worked on and improved. This means bigger and smarter tech will be available in the coming years, allowing for even greater cost savings, automation and control.

CONSIDERATIONS FOR SMART HOMES

I bet you are probably pretty excited now that you know what smart homes can do! However, before you jump in there are a couple considerations to keep in mind.

1. How much automation do you want/need?
2. What systems are most important to you (lighting, audio, climate, security, etc)?
3. What is your budget?
4. What are your future plans?

With the right preparation, a smart home can be a dream come true. It is important to understand how much technology you are comfortable with, and what systems are most important to you, so that you can create a plan and a budget to upgrade your current home – or so you know what to look for when you begin shopping.

Smart technology has come a long way! Smart homes are already incredibly intuitive and automated, with more technology and advancements to come. While some of us will always remain the “labor of love” type, many of us have less time and energy than we used to. Smart homes not only help save you money, but time and energy too so you can focus on more important things.